Test Bank for International Business The Challenge of Global Competition 12th Edition by Ball True / False Questions A senior manager of a major multinational said that "no one will be in a general management job by the end of the decade who didn't have international exposure and experience." True False American companies want their managers to have a basic knowledge of international business True False CEOs of major American firms doing business overseas are not convinced the business graduates they hire should have some education in the international aspects of business True False Only those companies that have foreign operations need to be aware of what is occurring globally in its markets and their industry True False Firms with no foreign operations of any kind not need managers with a global business perspective True False The United Nations uses the term transnational to describe a firm doing business in more than one country True False 1-1 According to the text, foreign business denotes the operations of a company outside its home or domestic market True False According to the text, a global company is an organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences True False According to the definitions in the text, a multidomestic firm is an organization that attempts to standardize operations worldwide in all functional areas True False 10 The term in this text, "international company," refers to both global and multidomestic companies True False 11 While international business as a discipline is relatively new, international business as a business practice is not True False 12 The tendency toward an international integration of goods, technology, information, labor and capital, or the process of making this integration happen, is referred to as economic globalization True False 13 There are five major kinds of drivers, all based on changes that are leading international firms to the globalization of their operations True False 1-2 14 Transnational corporations account for approximately 25 percent of total global output and nearly percent of world trade True False 15 Critics of large global firms compare these firms' sales with nations' total sales to illustrate the tremendous size of these firms True False 16 In 2006, ExxonMobil's sales worldwide were greater than the gross national incomes of all but the largest 19 nations of the world True False 17 When a global firm's total sales are greater than a nation's GNI, the national government is defenseless against such a firm True False 18 One variable commonly used to measure where and how fast internationalization takes place is the increase in total foreign direct investment True False 19 The world stock of outward foreign direct investment was $12.5 trillion in 2006, which was almost 10 times what it was in 1980 True False 20 Exporting refers to the transportation of any good or service to a destination inside a country or region True False 1-3 21 Supporters of globalization generally argue that it is the best strategy for advancing the world's economic development True False 22 Expanded international trade is linked with the creation of more and better jobs True False 23 Globalization has produced uneven results across nations and people True False 24 Opponents of free trade point out that globalization has contributed to a decline in environmental and health conditions True False 25 International business differs from domestic business in that a firm operating across borders must deal with three kinds of environments True False 26 The three environments for international business are domestic, foreign and export True False 27 Environment, as used in the textbook, is the sum of all the forces surrounding and influencing the life and development of the firm True False 28 The environmental forces can be classified as internal and foreign True False 1-4 29 The external forces are commonly called uncontrollable forces True False 30 Management must administer the controllable forces in order to adapt to changes in the uncontrollable environmental variables True False 31 The domestic environment is composed of all the controllable forces originating in the home country that influence the life and development of the firm True False 32 The kinds of forces in the foreign environment are the same as those in the domestic environment except they occur in foreign nations True False 33 The values of the foreign and domestic forces are identical, but the forces themselves are different True False 34 A problem with the foreign forces is that they are frequently difficult to assess, especially their legal and political elements True False 35 One part of the international environment is the interaction between the domestic and foreign environmental forces True False 1-5 36 Those who work in the international environment find that decision making is not as complex as it is in a purely domestic environment True False 37 The international environment is the interactions between the domestic and foreign environmental forces or between sets of foreign environmental forces True False 38 Managers in the international environment find that decision making is easier because foreign countries are smaller than markets in the United States True False 39 The self-reference criterion is probably the biggest cause of international business blunders True False 40 An international manager has two choices on what to overseas with a concept or technique employed in domestic operations: (1) transfer it intact or (2) adapt it to local conditions True False Multiple Choice Questions 41 The increased internationalization of business requires to have a basic knowledge of international business A all managers B managers of multinationals C managers of transnationals D managers of purely domestic operations 1-6 42 There is an emphatic need for all business people to have a basic knowledge of: A foreign travel B international business C the Pacific Rim D foreign exchange 43 According the text, American CEOs want business graduates they hire to have some education in international business A if they are going to work overseas B if they are going to work in a firm with no foreign operations C Neither A nor B because they can learn on the job D Both A and B 44 Historically, international business: A is relatively new B existed before the time of Christ C B and D D was influenced by the rise of the Ottoman Empire 45 As used in the text, a global company is an organization A that attempts to standardize operations worldwide in most or all functional areas B that looks for differences among markets C that is transnational D all of the above 46 Firms that have substantial operations in more than one country are called A global companies B multidomestic firms C affiliated companies D A, B, and C E A and B 1-7 47 An international business A is a business whose activities involve crossing national borders B denotes the domestic operations within a foreign country C is an organization with multicountry affiliates D is an organization that attempts to standardize operations worldwide 48 Foreign business denotes A a business whose activities involve crossing national borders B the domestic operations within a foreign country C an organization with multicountry affiliates D an organization that attempts to standardize operations worldwide 49 A multidomestic company is A a business whose activities involve crossing national borders B the domestic operations within a foreign country C an organization with multicountry affiliates D an organization that attempts to standardize operations worldwide 50 A global company (GC) is A a business whose activities involve crossing national borders B the domestic operations within a foreign country C an organization with multicountry affiliates D an organization that attempts to standardize operations worldwide 51 International business really began: A with the East India Company chartered in 1600 B when Singer Sewing Machine put up a factory in Scotland in 1868 C before the time of Christ D when Colt Fire Arms set up a plant in England 1-8 52 The major globalization drivers include all of the following except: A Political B Social C Technological D Market E None All of the above are major kinds of globalization drivers 53 The trend toward unification and socialization of the global community is illustrated by which of the following: A Preferential trading arrangements that group several nations into a single market B Progressive increases in barriers to foreign investment by most governments C Increased public ownership of much of the industry in formerly communist nations D All of the above are aspects of the trend toward unification and socialization of the global community 54 UNCTAD, an agency of the United Nations estimates there are international firms in the world A 5,500 B 12,000 C 64,000 D 120,000 E over 800,000 55 In 2006, only _ nations had GNIs greater than the total sales of ExxonMobil A 46 B 19 C D 76 1-9 56 Due to the expanding importance of foreign-owned firms in local economies, host governments have made their policies toward these companies _ A more strict B more liberal C harsher D more confronting E A and C 57 Foreign subsidiaries must obey the local laws If they don't, they are subject to: A legal action by the host country B legal action by the host country and the country of the parent company C seizure by the host government D cancellation by the parent company of its right to business in the host country E A and C 58 In 2006, the total amount of ExxonMobil's worldwide sales was greater than A the combined GNIs of 80 of the world's smallest economies B the sum of the combined sales of Ford and General Electric C the total sales of Wal-Mart Stores and Citigroup D the sum of the GNI of the U.S 59 In the United States, an overseas investment by an American resident is considered to be a foreign direct investment if it is or more of the stockholder's equity A 10 B 51 C 25 D 100 1-10 58 (p 15) In 2006, the total amount of ExxonMobil's worldwide sales was greater than A the combined GNIs of 80 of the world's smallest economies B the sum of the combined sales of Ford and General Electric C the total sales of Wal-Mart Stores and Citigroup D the sum of the GNI of the U.S AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: Topic: Growth of International Firms and International Business 59 (p 16) In the United States, an overseas investment by an American resident is considered to be a foreign direct investment if it is or more of the stockholder's equity A 10 B 51 C 25 D 100 AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Growth of International Firms and International Business 60 (p 17) The worldwide stock of outward FDI is estimated to have increased between 1980 and 2006 A Threefold B Eightfold C Twelvefold D Seventeenfold E Twentytwofold AACSB: Analytic Bloom: Knowledge Difficulty: Hard Learning Objective: Topic: Growth of International Firms and International Business 1-36 61 (p 17) According to the text, one variable commonly used to measure where and how fast internationalization takes place is: A the increase in a nation's population B the increase in the number of new companies formed C the increase in foreign direct investment D the increase in international trade AACSB: Analytic Bloom: Knowledge Difficulty: Hard Learning Objective: Topic: Growth of International Firms and International Business 62 (p 17) The level of service exports worldwide increased nearly between 1980 and 2007 A Fourfold B Sixfold C Ninefold D Twentyfold AACSB: Analytic Bloom: Knowledge Difficulty: Hard Learning Objective: Topic: Growth of International Firms and International Business 63 (p 20) According to supporters of the globalization of trade and investment, free trade A creates more and better jobs B benefits all nations and workers C does not cause the loss of high-paying jobs D all of the above AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: The Globalization Debate and You 1-37 64 (p 21) According to opponents of the globalization of trade and investment, A globalization has produced uneven results across nations and people B globalization has had harmful effects on labor and labor standards C globalization has contributed to a decline in environmental and health conditions D all of the above AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: Topic: The Globalization Debate and You 65 (p 23) Environment as used in the textbook is the forces surrounding and influencing the life and development of the firm and is classified as A controllable and uncontrollable B domestic and foreign C internal and external D All of the above E A and C AACSB: Analytic Bloom: Knowledge Difficulty: Hard Learning Objective: Topic: Why Is International Business Different? 66 (p 23) Management has no direct control over the external environment of the firm but can exert influence by A heavy promotion of new products to change cultural attitudes B focus on the strategic plan C lobbying D All of the above E A and C AACSB: Analytic Bloom: Knowledge Difficulty: Hard Learning Objective: Topic: Why Is International Business Different? 1-38 67 (p 23) International business differs from domestic business in that a firm operating across borders must deal with A C, D, and E B C and D C the foreign environment D the international environment E the domestic environment AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: Topic: Why Is International Business Different? 68 (p 23) Examples of the kinds of uncontrollable forces listed in the text are: A competitive B technological C gravitational D A and B E All of the above AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? 69 (p 23) The forces over which the management does have some command are called: A internal B controllable C foreign D A and B E B and C AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? 1-39 70 (p 24) The domestic environment is composed of all the uncontrollable forces originating in the that surround and influence the life and development of the firm A international arena B host nation C home country D foreign country E B and C AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? 71 (p 24) Foreign environmental forces often operate differently than domestic environmental forces because: A they are uncontrollable B force values are different C changes are difficult to assess D B and C E A, B, and C AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? 72 (p 24) The kinds of forces in the foreign environment are those in the domestic environment except that they occur in foreign nations A different from B the same as C less than D more stringent than AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? 1-40 73 (p 25) The international environment is the interactions between A the domestic environmental forces and the foreign environmental forces B the foreign uncontrollable forces and the domestic uncontrollable forces C the foreign environmental forces of two countries when an affiliate in one country does business in another country D both A and C E All of the above AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? 74 (p 25) Decision making in the international environment is it is in a purely domestic environment A less complex than B less demanding than C more complex than D about the same as AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: Topic: Why Is International Business Different? 75 (p 25) According to the text, personnel working in a foreign subsidiary are working in the international environment: A if they work and live in a foreign country B if they are responsible for the subsidiary's exports C if they are also responsible for the management of another foreign subsidiary D all of the above E B and C AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? 1-41 76 (p 25) Unconscious reference to one's own cultural values when judging behavioral actions of others in a new and different environment is called: A self-reference culture B self-reference values C self-reference criterion D self-reference customs E self-reference environment AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? 77 (p 27) The international business manager can choose to: A transfer a management practice intact B transfer and adjust a management practice C not transfer a management practice at all D A and B E A, B and C AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? Essay Questions 78 (p 7) Considering the dramatic internationalization of markets, discuss the comment "no one will be in a general management job by the end of the decade who has not had international exposure and experience." Answers may vary AACSB: Analytic Bloom: Synthesis Difficulty: Easy Learning Objective: Topic: International Business Terminology 1-42 79 (p 10) Discuss the differences of the various names given to firms that have substantial operations in more than one country such as a global company, a multinational firm and an international company Answers may vary AACSB: Analytic Bloom: Synthesis Difficulty: Medium Learning Objective: Topic: International Business Terminology 80 (p 10) Contrast the differences between firms of the early 1900s and present-day global companies Answers may vary AACSB: Analytic Bloom: Synthesis Difficulty: Medium Learning Objective: Topic: International Business Terminology 81 (p 12) Identify and discuss the major kinds of drivers that are leading international firms to the globalization of their operations Answers may vary AACSB: Analytic Bloom: Synthesis Difficulty: Easy Learning Objective: Topic: Drivers of Globalization 1-43 82 (p 15) Explain why comparisons of nations and industrial firms by GNI and total sales, respectively, can produce misleading results Answers may vary AACSB: Analytic Bloom: Synthesis Difficulty: Hard Learning Objective: Topic: Growth of International Firms and International Business 83 (p 18) Discuss the arguments supporting and opposing globalization of trade and investment Answers may vary AACSB: Analytic Bloom: Synthesis Difficulty: Medium Learning Objective: Topic: The Globalization Debate and You 84 (p 23) Discuss why and how international business differs from domestic business Answers may vary AACSB: Analytic Bloom: Synthesis Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? 85 (p 24) Discuss the three environments in which an international company operates Answers may vary AACSB: Analytic Bloom: Synthesis Difficulty: Hard Learning Objective: Topic: Why Is International Business Different? 1-44 Fill in the Blank Questions 86 (p 7) Management must have _ _ to be able to meet the challenge of global competition knowledge of international business AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: International Business Terminology 87 (p 9) Some academic writers suggest using terms such as multidomestic and _ as synonyms for what others call a multinational multilocal AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: International Business Terminology 88 (p 10) The term is used to describe an organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences multidomestic company AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: Topic: International Business Terminology 1-45 89 (p 10) The term refers to both global and multidomestic companies international company AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: Topic: International Business Terminology 90 (p 10) is business whose activities involve crossing national borders International business AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: Topic: International Business Terminology 91 (p 10) _ denotes the domestic operations within a foreign country Foreign business AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: International Business Terminology 92 (p 12) The tendency toward an international integration of goods, technology, information, labor and capital, or the process of making this integration happen, is termed economic globalization AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Globalization - What is it? 1-46 93 (p 12) The five major kinds of drivers of globalization are _, _, , _, and _ political, technological, market, cost, and competitive AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Globalization - What is it? 94 (p 15) International companies have _ their participation in world trade since 1995 increased AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: Topic: Growth of International Firms and International Business 95 (p 17) _ _ _ refers to direct investments into equipment, structures, and organizations in a foreign country at a level that is sufficient to obtain significant management control Foreign direct investment AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: Topic: Growth of International Firms and International Business 96 (p 17) _ refers to the transportation of any domestic good or service to a destination outside a country or region Exporting AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: Topic: Growth of International Firms and International Business 1-47 97 (p 20) , as used in the text, is the sum of all the forces surrounding and influencing the life and development of the firm Environment AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Growth of International Firms and International Business 98 (p 23) International business differs from domestic business in that a firm operating across borders must deal with the forces of , , and _ environments domestic, foreign, and international AACSB: Analytic Bloom: Knowledge Difficulty: Hard Learning Objective: Topic: Why Is International Business Different? 99 (p 23) Environmental forces can be classified as or external, internal OR controllable, uncontrollable AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: Topic: Why Is International Business Different? 100 (p 23) External environmental forces are commonly referred to as _ uncontrollable AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: Topic: Why Is International Business Different? 1-48 101 (p 23) Internal environmental forces are commonly referred to as controllable AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: Topic: Why Is International Business Different? 102 (p 24) The is composed of all the uncontrollable forces originating in the home country domestic environment AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? 103 (p 24) The forces in the are the same as those in the domestic environment except that they occur in foreign nations foreign environment AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? 104 (p 25) The is the interaction between domestic and foreign environmental forces or between sets of foreign environmental forces international environment AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? 1-49 105 (p 25) A common cause of the added complexity of foreign environments is managers' unfamiliarity with other cultures and is called - self-reference criterion AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: Topic: Why Is International Business Different? 1-50 ... than A the combined GNIs of 80 of the world's smallest economies B the sum of the combined sales of Ford and General Electric C the total sales of Wal-Mart Stores and Citigroup D the sum of the. .. composed of all the controllable forces originating in the home country that influence the life and development of the firm True False 32 The kinds of forces in the foreign environment are the same... than 1-13 73 The international environment is the interactions between A the domestic environmental forces and the foreign environmental forces B the foreign uncontrollable forces and the domestic